1. Field of the Invention
This invention generally relates to the displaying of information. In particular, this invention relates to the displaying of information related to stock trading and order entry.
2. Description of Related Art
The trading of stocks is generally divided into two different categories. The first category is where the majority of trading is done face-to-face on a trading floor. This type of trading referred to as a “listed” exchange. Orders generally come in through brokerage firms that are members of the exchange and flow down to floor brokers who go to a specific spot on the floor where the stock trades. At this specific location there is a “specialist” who matches buyers and sellers. Prices are generally determined using an auction type method.
The second type of exchange is an over-the-counter market, synonymous with the NASDAQ® exchange. The over-the-counter markets have no central location or floor and trading is done electronically through a network of dealers. With the over-the-counter market, brokerages act as “market makers” for various stocks where the market maker provides continuous bid and ask prices within a prescribed percentage spread for shares for which they are designated to make a market.
As discussed above, market makers provide continuous bid and offer prices. Furthermore, market makers enhance stock liquidity and assist in long-term growth of the market.
For over-the-counter trades, there are a variety of ways that security prices are quoted to traders. These various ways can depend on, for example, the amount of information desired, access rights, and fees paid to the quoting service. For Level I access, which is generally published and seen as the “real-time quote” on the Internet, real-time bid/ask quotes for securities trading on the NASDAQ® are provided. Level I access is fairly limited in terms of the information it provides since it does not disclose who is biding or asking for the stock, and it does not illustrate how many shares the market maker desires. While Level I shows the current quote, the current quote may be for a different lot than what the trader is trading and a trader's order could be passed around until a market maker can profit from the order.
Level II includes all the information from Level I and also provides real-time access to the quotations of individual market makers registered in every NASDAQ® listed security, as well as the offering or biding lots they desire. Level II access also provides the name of the market maker looking to trade the stock and allows traders to see which market makers are showing the most interest in a stock by identifying the patterns for each market maker. Generally, Level II access is a subscription-based service depending on, for example, the number of trades the trader makes, commissions, or the like.
Level III trading is cumulative of Level I and II and also includes the ability to enter quotes, execute orders and send information. Level III trading is generally restricted to NASD member firms that function as registered market makers.
A typical Level II quote display for NASDAQ® stocks is illustrated in FIG. 1. In FIG. 1, the Level II quote display 9 includes various information such as the stock symbol, last price, change information, volume information, and high and low price information. Furthermore, the Level II quote display is divided into two columns, the bid column 15 and the ask column 17. Within these two columns, the display sorts data so that the highest bid price and the lowest ask price are on the top of the columns, respectively, with the colors in each section representing the price point with all the market participants at the same price represented by the same color. For example, in the quote display 9 illustrated in FIG. 1, market participants at the same price are represented by the same color bands 13 with the thickness of each color band being proportional to the number of market participants at that price point.
Level II access allows traders to view changes to NASDAQ® equity price and size dynamically and in real-time across multiple market makers, ECNs (Electronic Communication Networks) and exchanges. Viewing the price and size movement of all market participants allows users to closely follow, and sometimes predict, the direction and flavor of the market. For example, as size, i.e., liquidity, builds on one side of the market, often there is a price move away from this liquidity pool. It is valuable for a trader to see the list of market makers as well as the size and liquidity changes that may impact feature price movements.